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CONTRACT LAW

There are three main forms of damages which need to be considered: nominal, compensatory and agreed damages.

Nominal Damages

In principle, every breach of contract gives rise to a right to nominal damages. For this reason, a breach of contract may be said to be actionable per se. Nominal damages are ‘not intended to compensate for anything at all’ but are awarded simply ‘to mark the fact that there has been a breach of contract’ (Mappouras v Waldrons [2002] EWCA Civ 842 at para 15 (Kay LJ)).

In the past, nominal damages had two principal uses. First, they could be used as a means of establishing a legal right. Such use tended to occur in the context of disputes over property rights. These days the separate remedy of a declaration by the court is a more effective means of achieving this aim.

The second use was as a peg on which to hang costs: an award of nominal damages would generally entitle the claimant to an order that the defendant pay both parties’ costs. These days, the courts are more reluctant to adopt in mechanical fashion the principle that costs follow the event where that event is no more than the award of nominal damages.

Because of these developments, Professor Burrows has suggested that nominal damages ‘are superfluous and could happily be abolished’ (Burrows A, Remedies for Torts and Breach of Contract (4th edn, 2019) at 503).

Finally, while nominal damages involve the award of a nominal amount, there seems to be little consistency in the precise amount awarded. In Liverpool City Council v Irwin [1977] AC 239 at 264 and 270, the House of Lords reduced the nominal damages awarded by the County Court judge from £10 to £5. In the Court of Appeal, Roskill LJ had thought that the proper figure was £2 ([1976] QB 319 at 333).

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